Wage Differentials Between Federal Government and Private Sector Workers.

Smith, Sharon Patricia

This study examined the earnings and wage rate differentials between Federal government and private sector workers in 1960 and 1970 to consider the comparability of these workers and the application of the Comparability Doctrine in Federal pay policy during that period. Two types of earnings and wage rate equations were estimated by ordinary least squares for all Federal and all private workers and eight race-sex groups of Federal and private workers. The data came from the 1960 and 1970 Public Use Samples. Ronald Oaxaca's technique for analyzing differentials was employed to decompose the estimated differentials into a part attributable to differences in characteristics between the two types of workers and a part ascribed to economic rent paid to Federal workers. These results indicated that Federal earnings and wage rates exceeded private in both years for every group examined. The largest proportion of the differentials, over 70 percent in most cases, for most race-sex groups consisted of economic rent paid to Federal workers. It was concluded that the source of this is the Federal career employees system. It was recommended that the number of applicants at each Federal job level be weighted in considerations of Federal pay raises. (The document concludes with eight pages of a selected bibliography and an appendix of the means of variables.) (Author)